Bankruptcy Forms: Filing Bankruptcy Chapter 7 Bankruptcy Software Chapter 13

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TITLE 11–BANKRUPTCY

CHAPTER 9– ADMINISTRATION

Sub Chapter III – The Plan

Sec. 943. Confirmation

   (a) A special tax payer may object to confirmation of a plan.
    (b) The court shall confirm the plan if--
        (1) the plan complies with the provisions of this title made 
    applicable by sections 103(e) and 901 of this title;
        (2) the plan complies with the provisions of this chapter;
        (3) all amounts to be paid by the debtor or by any person for 
    services or expenses in the case or incident to the plan have been 
    fully disclosed and are reasonable;
        (4) the debtor is not prohibited by law from taking any action 
    necessary to carry out the plan;
        (5) except to the extent that the holder of a particular claim 
    has agreed to a different treatment of such claim, the plan provides 
    that on the effective date of the plan each holder of a claim of a 
    kind specified in section 507(a)(1) of this title will receive on 
    account of such claim cash equal to the allowed amount of such 
    claim;
        (6) any regulatory or electoral approval necessary under 
    applicable nonbankruptcy law in order to carry out any provision of 
    the plan has been obtained, or such provision is expressly 
    conditioned on such approval; and
        (7) the plan is in the best interests of creditors and is 
    feasible.

(Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2624; Pub. L. 98-353, title III, 
Sec. 497, July 10, 1984, 98 Stat. 384; Pub. L. 100-597, Sec. 10, Nov. 3, 
1988, 102 Stat. 3030.)


                      Historical and Revision Notes

                         legislative statements

    Section 943(a) of the House amendment makes clear that a special 
taxpayer may object to confirmation of a plan. Section 943(b) of the 
House amendment is derived from section 943 of the House bill respecting 
confirmation of a plan under chapter 9. It must be emphasized that these 
standards of confirmation are in addition to standards in section 1129 
that are made applicable to chapter 9 by section 901 of the House 
amendment. In particular, if the requirements of sections 1129(a)(8) are 
not complied with, then the proponent may request application of section 
1129(b). The court will then be required to confirm the plan if it 
complies with the ``fair and equitable'' test and is in the best 
interests of creditors. The best interests of creditors test does not 
mean liquidation value as under chapter XI of the Bankruptcy Act 
[chapter 11 of former title 11]. In making such a determination, it is 
expected that the court will be guided by standards set forth in Kelley 
v. Everglades Drainage District, 319 U.S. 415 (1943) [Fla.1943, 63 S.Ct. 
1141, 87 L.Ed. 1485, rehearing denied 63 S.Ct. 1444, 320 U.S. 214, 87 
L.Ed. 1851, motion denied 64 S.Ct 783, 321 U.S. 754, 88 L.Ed. 1054] and 
Fano v. Newport Heights Irrigation Dist., 114 F.2d 563 (9th Cir. 1940), 
as under present law, the bankruptcy court should make findings as 
detailed as possible to support a conclusion that this test has been 
met. However, it must be emphasized that unlike current law, the fair 
and equitable test under section 1129(b) will not apply if section 
1129(a)(8) has been satisfied in addition to the other confirmation 
standards specified in section 943 and incorporated by reference in 
section 901 of the House amendment. To the extent that American United 
Mutual Life Insurance Co. v. City of Avon Park, 311 U.S. 138 (1940) 
[Fla.1940, 61 S.Ct. 157, 85 L.Ed. 91, 136 A.L.R. 860, rehearing denied 
61 S.Ct. 395, 311 U.S. 730, 85 L.Ed. 475] and other cases are to the 
contrary, such cases are overruled to that extent.


                        senate report no. 95-989

    Section 946 [enacted as section 943] is adopted from current section 
94 [section 414 of former title 11]. The test for confirmation is 
whether or not the plan is fair and equitable and feasible. The fair and 
equitable test tracts current chapter X [chapter 10 of former title 11] 
and is known as the strict priority rule. Creditors must be provided, 
under the plan, the going concern value of their claims. The going 
concern value contemplates a ``comparison of revenues and expenditures 
taking into account the taxing power and the extent to which tax 
increases are both necessary and feasible'' Municipal Insolvency, supra, 
at p. 64, and is intended to provide more of a return to creditors than 
the liquidation value if the city's assets could be liquidated like 
those of a private corporation.


                         house report no. 95-595

    In addition to the confirmation requirements incorporated from 
section 1129 by section 901, this section specifies additional 
requirements. Paragraph (1) requires compliance with the provisions of 
the title made applicable in chapter 9 cases. This provision follows 
section 94(b)(2) [section 414(b)(2) of former title 11]. Paragraph (2) 
requires compliance with the provisions of chapter 9, as does section 
94(b)(2). Paragraph (3) adopts section 94(b)(4), requiring disclosure 
and reasonableness of all payments to be made in connection with the 
plan or the case. Paragraph (4), copied from section 92(b)(6) [probably 
should be ``94(b)(6)'' which was section 414(b)(6) of former title 11], 
requires that the debtor not be prohibited by law from taking any action 
necessary to carry out the plan. Paragraph (5) departs from current law 
by requiring that administrative expenses be paid in full, but not 
necessarily in cash. Finally, paragraph (6) requires that the plan be in 
the best interest of creditors and feasible. The best interest test was 
deleted in section 94(b)(1) of current chapter IX from previous chapter 
IX [chapter 9 of former title 11] because it was redundant with the fair 
and equitable rule. However, this bill proposes a new confirmation 
standard generally for reorganization, one element of which is the best 
interest of creditors test; see section 1129(a)(7). In that section, the 
test is phrased in terms of liquidation of the debtor. Because that is 
not possible in a municipal case, the test here is phrased in its more 
traditional form, using the words of art ``best interest of creditors.'' 
The best interest of creditors test here is in addition to the financial 
standards imposed on the plan by sections 1129(a)(8) and 1129(b), just 
as those provisions are in addition to the comparable best interest test 
in chapter 11, 11 U.S.C. 1129(a)(7). The feasibility requirement, added 
in the revision of chapter IX last year, is retained.


                               Amendments

    1988--Subsec. (b)(6), (7). Pub. L. 100-597 added par. (6) and 
redesignated former par. (6) as (7).
    1984--Subsec. (b)(4). Pub. L. 98-353, Sec. 497(1), struck out ``to 
be taken'' after ``necessary''.
    Subsec. (b)(5). Pub. L. 98-353, Sec. 497(2), substituted provisions 
requiring the plan to provide payment of cash in an amount equal to the 
allowed amount of a claim except to the extent that the holder of a 
particular claim has agreed to different treatment of such claim, for 
provisions which required the plan to provide for payment of property of 
a value equal to the allowed amount of such claim except to the extent 
that the holder of a particular claim has waived such payment on such 
claim.


                    Effective Date of 1988 Amendment

    Amendment by Pub. L. 100-597 effective Nov. 3, 1988, but not 
applicable to any case commenced under this title before that date, see 
section 12 of Pub. L. 100-597, set out as a note under section 101 of 
this title.


                    Effective Date of 1984 Amendment

    Amendment by Pub. L. 98-353 effective with respect to cases filed 90 
days after July 10, 1984, see section 552(a) of Pub. L. 98-353, set out 
as a note under section 101 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 347, 930 of this title.



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